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HSBC to cease wealth management business in some Middle East countries
Existing customers will continue to receive basic services
September 1, 2013 5:01 by Reuters
HSBC Holdings will stop offering wealth management products in Bahrain, Jordan and Lebanon as the British lender continues to exit small or insufficiently profitable operations globally as part of a strategic review, the bank said.
HSBC, Europe’s biggest bank, has cut its retail banking business in some Middle Eastern nations, including the three nations affected in the latest move, and merged its operations in Oman with a local bank as part of a three-year global restructuring instigated by chief executive Stuart Gulliver.
The worldwide move, which has seen the bank exit or sell 54 businesses to help improve profitability, has also seen it scale back its Islamic and private banking operations.
“HSBC’s global strategy for retail banking and wealth management is to offer and grow the wealth business in markets where we can achieve scale,” the bank said in a statement issued to Reuters on Sunday.
“After a detailed review of our MENA business, we will discontinue sales of any new wealth investment or wealth insurance products in Lebanon, Jordan and Bahrain from October 7, 2013.”
Existing customers will continue to receive basic services and their wealth management-related investments will be maintained until maturity, the lender said, adding the decision has not prompted job losses.
The lender, one of the largest international banks in the region with a presence in 14 Middle Eastern countries, has informed employees about the decision internally and those affected will be absorbed by other teams within HSBC’s retail and wealth management division, one banking source said, asking not to be identified as the matter is not public.
HSBC’s wealth management operations fall under its retail and wealth management division. It operates a private banking business separately.
Global wealth managers have flocked to the Gulf Arab region in recent years, lured by its rich energy and commodity reserves, relatively higher economic growth and rising population.
Wealthy individuals in the Middle East and Africa saw the value of their assets rise 9.1 per cent to US$4.8 trillion in 2012, a study by the Boston Consulting Group (BCG) showed in June, as strong economies and rising equity markets fuelled regional growth.
However, competition in the sector has intensified in recent years with about 30 wealth and private banking firms seeking to attract clients from the region and leading to shrinking fees.